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SALES COMPARISON APPROACH- adjustment factors
April 23rd, 2019 9:40 AM
Some adjustments are calculated by multiplying an adjustment factor times the quantity difference between the subject and the comparable, e.g., if the GLA "Gross Living Area" for the subject property is 2,000 sqft and for the comparable, 1,800 sqft, the difference, 200 sf would be multiplied by the adjustment factor. If the GLA adjustment factor was determined to be $50  per square foot, the adjustment would be $50 x 200 sqft = $10,000 added to the comparables sales price. Obviously, the smaller the difference between GLA's, the smaller the adjustment, regardless of the magnitude* of the adjustment factor. So, the greater the similarity between the subject and the comparables, the smaller the impact of a too high or too low adjustment factor. Our next blog will continue with the Sales Comparison Approach and bracketing.

*The GLA adjustment factor relates to an area's cost replacement value, depreciated. We will discuss this topic further under The Cost Approach which will be addressed in a future blog.   

Posted by Richard Wayne Abatelli on April 23rd, 2019 9:40 AMPost a Comment

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